GENERAL COMMENTS:
As the corn market fronts a snappy rally, the livestock contracts are suffering. With a shaky economy, unbridled inflation and increasing interest rates, cattle feeders and hog growers don't like to see any uptick in feed prices unless they have feed themselves to sell. December corn is up 11 3/4 cents per bushel and December soybean meal is up $13.70. The Dow Jones Industrial Average is down 19.34 points.
LIVE CATTLE:
The live cattle market is following suit with the rest of the livestock complex as it follows in the pursuit of lower prices heading into Tuesday's afternoon. August live cattle are down $0.30 at $138.05, October live cattle are down $0.97 at $143.25 and December live cattle are down $0.80 at $149.65. This comes as the market watches corn prices rally $0.10 to $0.11 higher. We'd like to think that corn prices don't affect the live cattle/fat cattle market since, at this point, these cattle have very few days left on feed, but unfortunately it does. The countryside hasn't seen any bids develop and it's likely that the market won't trade until Wednesday. Asking prices in the South are noted at $138 to $140 and the asking prices in the North are still illusive. Feedlots are expected to bat for steady to higher prices again this week, but if the board continues to trade in a doggish manner and boxed beef prices aren't supportive, then packers will likely become harder to deal with.
Boxed beef prices are mixed: choice down $0.60 ($265.64) and select up $0.88 ($239.74) with a movement of 78 loads (48.12 loads of choice, 12.89 loads of select, 4.31 loads of trim and 12.68 loads of ground beef).
FEEDER CATTLE:
Understanding today's feeder cattle market doesn't require a crystal ball, it just requires an understanding of the weather and how it affects the year's growing crops. Dana Mantini, DTN's Senior Market Analyst, said, "Corn futures are sharply higher early on Tuesday, with new crop December gapping higher, as crop conditions took a greater hit than most had anticipated. Good-to-excellent ratings on corn on a national basis fell by 3 percentage points to just 58%. That compares to the 64% rating of a year ago, as recent hot and dry weather for much of the western areas and Southern Plains has clipped yield potential. The crop is now 90% silked, and just under the five-year average of 93% at this time of year."
When evaluating the Cattle on Feed reports, the actual data is important, but the market acts when the report's findings vary from what analyst's projected -- and that's why Tuesday's corn market is substantially higher as crop conditions suffered more than what most analysts projected. Nevertheless, the corn market's rally is hindering the feeder cattle market as it's contracts plummet at least $2.00 lower in the nearby contracts and $1.00 lower in the deferred months. This could put a slight damper on the cash sales throughout the day, but largely those buyers understand that today's pressure comes as corn is shooting higher and that numbers of calves and feeders are still going to be thin no matter what corn does. August feeder cattle are down $2.27 at $179.00, September feeders are down $2.87 at $182.80 and October feeders are down $2.15 at $185.55.
LEAN HOGS:
The lean hog market is seeing a minor setback in its nearby contracts as the market retracks with the onset of higher corn prices. October lean hogs are down $1.00 at $99.30, December lean hogs are down $0.30 at $89.42 and February lean hogs are down $0.05 at $91.80. After blowing past resistance Monday afternoon, the complex is now trading back below $100.00, which will be inherently important to watch by the day's close. The further the market closes from that point, the stiffer the market's resistance grows. Cash hog trade could grow stronger by this afternoon, but it wouldn't be surprising to see the market's big volume of hogs trade until Wednesday.
Hog prices are lower on the Daily Direct Morning Hog Report, down $4.29 with a weighted average of $118.59, ranging from $114.00 to $133.00 on 4,177 head and a five-day rolling average of $126.38. Pork cutouts total 182.15 loads with 171.96 loads of pork cuts and 10.19 loads of trim. Pork cutout values: up $1.36, $125.42. The projected lean hog index for Aug. 5 is down $0.17 at $121.92, and the actual index for Aug. 4 is up $0.48 at $122.09.
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